——The Hobbit began filming recently in New Zealand, an event barely noticed in the larger world – who cares until it is in theatres? For the nation of New Zealand, however, this was met with a massive sigh of relief, as it was a seemingly happy ending to a divisive and intense battle between the MEAA, an Australian-based actors and film workers union, and Warner Brothers, the producers of the movie via director Peter Jackson’s WingNut Films Limited. While it may seem odd to outside observers, what began as a workers strike eventually escalated into citizens taking to the streets of Wellington, backing WingNut Films stance, and the Parliament of New Zealand passing emergency laws to resolve the “crisis” – over a pair of fantasy movies. While the outline of events is confusing, I think it reveals something very important about how globalization really functions, and how reality clashes with the myths.

——Anyway, to start, at the beginning of October 2010, as WingNut began finalizing the filming process, New Zealand Actors Equity, a branch of the MEAA, approached WingNut about negotiating a collectively bargained contract for the around 200 workers on the project they represented (only a small portion of the total workers – MEAA is not the largest union in New Zealand by any stretch). Peter Jackson replied that it was, in fact, illegal for him to negotiate with the MEAA – as they were not registered in New Zealand, having been de-registered in the past few years due to some legal disputes. The MEAA, disagreeing with this interpretation of the law, took a fairly drastic step, and called upon the Screen Actor’s Guild, the US actor’s union and the largest actors union in the world, to issue a boycott of the production, stating it was not a unionized work. At this point, as production shut down, things got heated fast, when WingNut threatened to leave New Zealand entirely, and shoot the film elsewhere – Eastern Europe was the commonly named alternative. Given that for The Hobbit, a two-movie production, WingNut was expected to spend $500 million in New Zealand producing the movies and bring thousands of jobs, public opinion quickly turned against the MEAA, who dropped their demand within two weeks and lifted the boycott. Citing “inability to do business” in the country, however, WingNut and Warner Brothers continued to threaten to leave the country – at the end of October, the NZ Parliament passed a bill, approving a $27.5 million hand out to the company, in the form of tax rebates and shared marketing costs, and WingNut agreed to continue filming in New Zealand.

——Now, whether or not the MEAA was right or wrong is, in fact, not the issue here. Its true that WingNut pays its workers very generously – $5000 per week in NZ compared to $3800 in the United States, and for The Hobbit they had agreed to even share a small amount of the total profits with the workers. By the same token, the MEAA had not even demanded increased wages, just the very right to bargain collectively – as one actor put it, “we hadn’t even discussed coffee breaks” before things exploded, and it appears that while WingNut was correct on the legal front, the MEAA was unaware of the illegality of negotiations. Whats more important here is the final outcome – that a labour dispute between a union and a film company eventually resulted in action by the central government and a massive tax handout to the company. Any increase in labour costs from unionized workers demands being met would never have totaled that amount, not nearly – Peter Jackson himself labeled the costs of wages for workers as being “miniscule” compared to, for example, shooting the films in 3D. Furthermore, a fact that got lost in the debate, is that New Zealand already gives film makers a large tax rebate for working in the country – 15% of the total cost of the film. The crux of Warner Brother’s argument, however, was that many countries give a higher rebate. England, for example, gives a 20% rebate, while Canada gives an incredible 33% discount. As such, Warner Brothers had already pocketed 15% of $500 million, or $75 million, from the NZ government. Furthermore, the central government also passed a new labour law, applicable to all films made henceforth in New Zealand, stating that film companies can define their workers as contractors, instead of employees, and therefore deny them the benefits employees are entitled to and giving them further reductions in labour costs.

——I want to look at the end result of this little tale from the perspective of globalization. The proponents of globalization always point to one thing – lower costs. Yes, outsourcing costs some people jobs, but it leads to lower prices for goods or services for all people! As labour costs are lowered, the price of the good itself falls too. Some lose, but the majority gain. I will well admit that when talking about steel and Monopoly boards, this is true. Yet this just isn’t true in the movie industry – at a movie theatre, ticket prices are fixed – every movie costs the same to see, for reasons too complex to discuss now (if you think its so movies can compete on quality and to be fair to consumers, try again). In fact, because the movie is being shot in 3D, a god-forsaken waste of resources if there ever was one, ticket prices are actually going up. These tax breaks, therefore, are nothing but a direct transfer of money from the government, and therefore the people, of New Zealand, to the shareholders of Warner Brothers. Its not like The Hobbit movies are in any danger of losing money – the first Lord of the Rings movie, The Fellowship of the Ring, made $870 million globally, while the last, Return of the King, made $1.1 billion. The two Hobbit films, each costing $250 million, will probably make more due to the hike in prices for 3D, giving them obscene profit margins. It isn’t like they needed the tax breaks to stay in business. Most people portray this is just a part of “international competition”, but its a fundamentally unequal competition – its about power. Warner Brothers is international – they can film anywhere, while the government of New Zealand is purely national – it cant collect taxes anywhere outside of its borders. Its the same with England and Canada. On the face of it, the idea of tax breaks for films to make movies is laughable – if no country had them, then the film industry would have no choice but to pay the taxes. The optimal solution for every government is to have no handouts at all. As soon as one country gives the incentive, though, then everyone must follow suit. Its the textbook definition of beggar-thy-neighbor, race to the bottom policies – everyone loses but the company involved. The worst part, sadly, is that the media of New Zealand refused to portray it as such – the central government was congratulated for being extorted, for “saving the country’s film industry”. The power of ideology at work I suppose.